Hi guys, is it legal to allow your employer to deduct 5% income tax from your salary instead of the standard 18% rate? I’m about to accept a job offer where my would-be employer says they can give me this option and I was wondering if this is legal. If yes, would I have to prepare to pay the 13% difference by May next year?
I’m considering agreeing to this option since 18% is always such a huuuge thing whenever I start a new job after June.
But if you have been in Taiwan for 183 days or longer shouldn’t it be 5% ?
Yeah, but it seems this 183 day rule applies regardless of your actual stay in Taiwan.
I’ve been in another company a couple of years back, and when I switched to my current job, I had to endure paying 18% tax from August until June/July of the following year. Then after that, it went down again to 5%.
Some employers will.take the risk but English teaching game…Probably not.
I changed jobs in February. I paid 18% tax in Jan, Feb, March, April, May June, July.
My current job is an 11 months contract, so they say they will pay the 5% for 5 months. Sept-Jan
My old job (HESS English school) said that because Dec pay cheque is paid in January, it goes back up to 18%. My current job says that Dec pay cheque paid in January will be 5%
Why is there a 183 day rule if it doesn’t apply? It’s more like oh you worked at this job for 6 months, now it will go down to 5%.
So when you switched jobs on the latter half of the year, your new employer continued to deduct 5% from you instead of 18%? So when you filed taxes, did you have to pay anything instead of getting a refund?
I guess the benefit for me at that time was that I didn’t have to pay anything by May of the following year. But I had to wait til August for the tax refund.
This is legal. But, usually employers prefer to take 18% until you work for them for more than 183days.
No, the 183 day rule applies based on your actual stay in Taiwan.
If you stay here for more than 183 days, your tax rate for the year’s income is 5%, even if your work period is only 1 month.
What? So does that mean my current employer actually did wrong by deducting 18%? Coz before I worked for them, I am already down to 5% tax rate and have been in Taiwan for more than a year! I never went out for more than 183 days…
Not that it matters now, already got the refund, but daaaamn.
To be clear, staying for more than 183 days in a year, then, tax rate for the year is the rate for residents.
So, if I allow my employer to tax me at 5% rate this year (I’m going to start with them this month), does that mean I’ll have to pay the 13% difference by May next year?
Only if you’re in Taiwan for less than 183 days this year. For this reason, most companies will choose to just deduct the 18%, even if you worked for them last year. Kind of a CYA (cover your ass) to protect them if you decide to bail.
If I read your posts correctly, you have already stayed here for more than 183 days this year. Is this right?
Then, your tax rate for this year’s whole income is 5%. You don’t need to pay any by May next year, because the 5% will be deducted by your employer.
This is something that has always perplexed me. No employer has taken any tax from me, except the labor and insurance. Even that is not much. AND they only report the minimum. When it comes to tax time, I never have to pay anything. The attitude of the tax bureau is “don’t ask, don’t tell” and I guess it is perfectly legal.
Helps when doing US taxes, though. I only report to them what was reported on mine.
Yeah, as far as I remember I didn’t exit the country after CNY this year. As for work, though I switched jobs, I only had a couple of weeks gap in between and didn’t leave Taiwan during said gap.
Ha, probably explains why they taxed me 18% for almost one year! When I joined the first company I’ve worked for in Taiwan, I started in January so the 18% rate just lasted til June of the same year. However, since I started in company 2 from August, they decided to tax 18% out of me until the following year’s July. Dafuq. Anyway, like I said, I’ve already gotten back the refund from that.
So I’m joining a new company again this year (company 3) and this is the first time I’ve experienced being given tax options: to be taxed according to the tax calendar, or just 5%. Reason I’m asking is I just want to make sure the 5% option is legal. If it is, then I’m going to take it. I don’t have plans of leaving Taiwan soon anyway, but I figured it’s financially more practical to pay whatever’s lacking by May 2018 than suffer the 18% tax rate again from September 2017 til July 2018 (based from experience with company 2).
Hope that clears things up. And hey, thanks guys for all the responses! Much appreciated.
They did that because the following year started the 183-day counter over. So they just wanted to cover themselves for the first 183 days of that year
My current employer did the same thing to me the second year until I convinced them that they didn’t need to do that and just tax me at the normal 5% (might have been 6% at that time).
The 183 day rule is for the actual calendar year (Jan-Dec), so time spent in Taiwan the previous year is irrelevant. Also, the company that said January payment = January tax (even though it’s December work) was correct.
It’s the employer’s duty to withhold tax every month and remit it to the tax office. It’s the employee’s duty to settle the tax bill with the tax office by the deadline (including anything the employer failed to withhold), but afaik the employee can’t be held responsible for the employer’s failure to withhold the correct amount every month.
Underreporting (or overreporting) your salary for insurance purposes can result in fines for the employer. For labor insurance, underreporting is punishable by 4 times the missing premiums, but if you have an occupational accident it can rise to 10 times the missing premiums. The employer is also liable for the missing portion of any labor insurance benefit, which can be quite expensive.
I don’t recall what the penalty is for health insurance.
Tax evasion… I would have to look up the penalties, but my advice to you is not to evade.
@ everyone, when in doubt ask the tax office or a lawyer.
My employers have all said their accountants say it is legal.
Maybe its a different system for those in the teaching trap?
I wanted to file an amended return (we use that in the US so honest people can report income that does not get reported in traditional means) and the tax bureau lady just shook her head and said “no, no. no necessary.”
It’s conceivable that they found a way to do it legally, but I’m skeptical. I suppose you can ask the accountants.
I will do that.
But, if this tax thing comes back at me…
Thanks, so is getting taxed at 5% monthly as opposed to 18% down to 5% illegal?